Yahoo! Checks Out of the Net
Tuesday January 10, 2:33 pm ET
By Tom Taulli
Starbucks (Nasdaq: SBUX - News) has made a fortune by creating a business by projecting the image of a certain lifestyle. Now, Yahoo! (Nasdaq: YHOO - News) wants to tap into some of this lifestyle magic.
Yesterday, the Internet giant announced a deal with Sheraton Hotels (NYSE: HOT - News) to create Net lounges, providing free Internet access and available desktop computers to weary travelers. The name? You'll never guess: Yahoo! Link @ Sheraton.
OK, not exactly as catchy as Starbucks, but it appears that Yahoo! has spent some time researching the behavior of hotel guests. It turns out that, basically, they tend to stay in the lobby. What do they do there other than sip Starbucks coffee? You guessed it: The stare at their laptop screens.
It's true that these hotel users could easily hook up to DSL in their hotel rooms, but it seems they crave at least the illusion of social interaction. Perhaps a bit of people watching with their laptop isolationism?
The Yahoo!-Sheraton deal, though, is still in the experimental phase. That is, it's being rolled out in only four hotel locations (San Diego, Boston, New York, and Stamford, Conn.). Guests can access the service through Wi-Fi, which will launch a special Yahoo! home page. It will be customized for the local weather, local restaurants, and so on.
The lounges will also have access to printers so guests could, for example, print out their airline boarding passes while waiting for their bags to be brought down. Of course, guests can sign up for premium services, such as Yahoo! Briefcase, Yahoo! Music, Yahoo! Mail Plus, and so on.
On the surface, the deal certainly looks like a win-win situation. Sheraton, which has many business guests, needs to provide extra perks to maintain premium rates on its rooms. And associating with a company like Yahoo! might give the hotel chain some sort of cutting-edge feel.
In fact, Sheraton wants to be more than just a real estate company; it wants to develop a premium brand. After all, the company's CEO, Steve Heyer, was a former executive at Motley Fool Inside Value pick Coca-Cola (NYSE: KO - News), where he gained quite a lot of experience in branding. Heyer also recently hired a marketing executive from Coke, who is now the chief marketing officer at Sheraton.
As for Yahoo!, it's another sign that the company is trying to push its presence out of the virtual world into the real world. Basically, Yahoo! is trying to position itself as an entertainment company, not just a portal.
So, over the next year, you can expect many of these types of deals from Yahoo! What that means for shareholders is that Yahoo! is taking a judicious approach -- partnering with brick-and-mortar companies and starting new relationships with pilot programs.
Much as it has positive ramifications for Yahoo!, this is really a marginal deal for the aspiring entertainment company portal. There's no revenue to be derived. All it amounts to is some brick-and-mortar branding. Actually, this deal appears more significant for Sheraton. It's no easy feat to differentiate a hotel chain. |
